Volume XX Number 4

April 2007

Funding Model Pilot fo­r Virtual Communities a Success

By Jackie Damrau and Mary Jo Stark, Associate Fellows and Project Comanagers

The Society knew that it was going to have to change the way it provided monetary support to its communities. As they still do, geographic communities were receiving a portion of total membership dues to help them offset their annual operating expenses. However, virtual communities (that is, the special interest groups or SIGs) were never really sure how much money they could spend. They would spend money, send an expense report to the Society office, and get reimbursed.

Project Beginnings

During the transformation analysis phase, which Ed See (then STC President) and the STC Board of Directors started in 2003, the goal was for STC to move to a group of diverse communities who would have the same core skill sets, yet be treated equally in funding. Throughout the next five years, it became evident that the Society could no longer afford to continue the fixed-funding model. This old model was simply not sustainable or stable enough for the Society—or for its communities. We developed a transformation road map that called for a new community funding model.

Enter Suzanna Laurent, the 2005–06 STC President, with a mission to establish a more robust method for funding all STC communities. The funding model project started in June 2005 following STC’s 52nd Annual Conference in Seattle, Washington. Jackie Damrau and several board members—Vici Koster-Lenhardt, Beth Tanner, and Mary Jo Stark—began working to determine what funding structure type would be in the Society’s best interests. It was decided that a zero-based budgeting model was the ideal choice.

The Funding Model Committee began with the following charter:

To promote, emphasize, and reward a thoughtful, strategic financial planning process and to build a shared responsibility for financial stability across the Society for each major community program.

We altered the existing community funding model—a fixed entitlement in which communities received a blanket amount of money—to a variable-funding model based on the total number of members. The variable-funding model was at the time felt to be a more affordable solution for the Society, which was encountering its own operational budget problems.

Change in Committee Members

The Funding Model Committee members changed about six months into the project. Vici and Beth were tasked with other projects by the STC President, Paula Berger. So, the Funding Model Committee was put under the auspices of the Finance Committee, chaired by W. C. Wiese, STC Treasurer. After this change, the team comprised our two longest-running members—Mary Jo Stark and Jackie Damrau—as well as W. C. Wiese, Char James-Tanny (STC Secretary), Susan Burton (STC Executive Director), Doris Fee (STC Interim CFO), and Peg Cottrell (STC Director of Administration).

This new committee began picking up steam, and soon developed a funding model that was ready to be put to the test.

Deciding Our Success Criteria

The project could only be successful if STC communities could step out of the box and try a new model. We built the new funding model to:

1. Distribute funds based on service provided
2. Use a zero-based budgeting methodology
3. Have some level of reserves
4. Enable STC to provide financial rewards (incentives) for strategic initiatives

Three virtual communities were selected to pilot this funding model: the Management, Instructional Design & Learning, and Consulting & Independent Contracting SIGs.

Before these SIGs could receive their funding, they were asked to:

• Elect SIG officers: a manager, assistant manager, and treasurer
• Prepare a proposed budget detailing how the funds would be spent relative to the SIG’s strategic plan
• Use an online or physical bank account
• Establish how money would be controlled and disbursed
• Require expense report approval from the treasurer and SIG manager before dispensing monies
• Establish how to handle inappropriate expenses
• Prepare a monthly report, submitted by the treasurer to the SIG leaders
• Make use of an alternative banking solution or continue the sending of physical checks to the Society office in cases where online banking is unavailable

Funding Model Process

The three SIGs were then asked to use the following process to request operating funds for the 2006–07 fiscal year:

1. Complete a spreadsheet outlining the community strategy for the requested fiscal year
2. Submit a spreadsheet to the STC finance team for review
3. Submit a year-end report of expenditures for strategic initiatives to the finance team

In response, the finance team and other STC committees (such as technology) were to review the funding request, and either approve it or request that the community submit additional information. The finance team was to then request the STC office to disburse funds for the first half of the fiscal year, with the second half of funds being disbursed in January.

Pilot Success

The pilot model has been in effect for six months now. While every pilot has its business hiccups, we have concluded that the new funding model does work for virtual communities. Thus, we celebrate the model’s success.

We are still monitoring expenses through the end of the 2006–07 fiscal year, and will be conducting a “lessons learned” session with the three pilot SIGs in early June. Results of the funding model pilot process will then be turned over to the SIG Advocate by early July to aid work in promoting the model among remaining SIGs. The Advocate will also have templates and process and mentoring assistance from the pilot SIGs in order to help the remaining SIGs effectively plan their budgets. This will aid the Advocate in continuing to effectively represent SIG needs at future board meetings.

Thank You to . . .

The authors would like to say that we’ve enjoyed working with the Management SIG (Mike Markley and Richard Mateosian), the Instructional Design & Learning SIG (Jane Smith and Jeanette [Thomas] Rogers), the Consulting & Independent Contracting SIG (Linda Gallagher and E. C. Eklund), and the 2006–07 SIG Advocate (Judith Herr) on this pilot project.

We also thank all the committee members who helped get the project started.